Top Stories Last Week
• US Stock Markets Declined after Reaching New Records Last Week
US stock markets declined after reaching new records without much new release of economic data. In the week, S&P index declined 1.0%, while MSCI EAFE index climbed 0.3%. However, the MSCI Emerging Market Index was lost 0.6%. Gold was up by 0.4% while the SPGC commodity index dropped 0.8%. The bond markets were mixed. Barclays US Treasury index was up by 0.3%, and US high yield bonds dropped 0.7%.
• Bank of Japan Stayed Pat on Monetary Stimulus
The Bank of Japan left its vast monetary easing program unchanged as it issued an upbeat assessment of Tokyo’s efforts to counter growth-sapping deflation. In an expected move, the central bank said its board voted unanimously to stand pat after a two-day policy meeting. The Bank of Japan, which unveiled its own gigantic bond-buying program in April, said the outlook for the country was looking brighter, while early signs of rising prices were good news for its efforts to hit a 2% inflation target within two years. Many analysts have expressed doubts on the Bank of Japan’s ambitious timeline, given that the country has been struggling with deflation for more than 15 years. The inflation target is a crucial part of Prime Minister Shinzo Abe‘s plan, known as Abenomics.
• Chinese Economy Seemed to Stabilize
China’s economy could be stabilizing, the latest set of economic data from the country has suggested. Factory output in July rose 9.7% YOY, ahead of expectations and up from the previous month’s figure of 8.9%. Consumer prices held steady in July, rising 2.7% from a year earlier, matching the rate seen in June. China’s growth rate has been slowing at its fastest pace since the global financial crisis in 2008. In the second quarter of the year, China’s economy grew by 7.5% compared with the previous year, down from 7.7% in the first quarter. The government has set a target of 7.5% growth for the whole of 2013, which would mark the lowest rate of expansion in more than two decades.
In other data released on Friday, the producer price index fell 2.3% in July from a year earlier compared with a drop of 2.7% in June. However, although July’s retail sales jumped by 13.2% compared with last year, that was a slower pace of growth than the 13.5% recorded between June 2012 and June 2013. On Thursday, trade figures showed export and import growth rebounded in July. Analysts welcomed the latest data, but said more evidence would be needed before it would be safe to say whether the economy was beginning to pick up again.
Top Stories to Watch This Week
• US Retail Sales
US Retail Sales is expected to grow by 0.4% in June.
• Euro Zone GDP
Economic Growth in Euro zone is expected to be positive in Q2.
• US and Euro Zone CPI
Both US and Euro zone inflation rates will be likely be below 2%.
• More Earnings Results
Walmart, Macy’s, Deere & Co and Cisco Systems will all report throughout the week.